Credit card is a very useful thing in today's time. Spending money from a credit card is exactly like taking a loan from a bank and spending it. The only difference is that you are given a grace period to repay the loan taken from a credit card. If you repay the loan in that period, then you do not have to pay any interest. But if you are unable to repay the amount in the grace period, then you have to pay a lot of interest.

In such a situation, many times people come in such a situation that they do not have money in their account to pay the credit card balance and they keep getting trapped in the debt trap. In this situation, the option of credit card balance transfer can be useful for you. But for this, you should have more than one credit card. Let us tell you what is credit card balance transfer, when is it a profitable deal for you and when is it a loss.

What is balance transfer?

In balance transfer, the loan amount is repaid by transferring the money from one credit card to another. For this, it is necessary that the limit of your second credit card (from which you are transferring the money) is high because you can transfer only up to 75 percent of the amount of your credit card. The bank from whose card you take the money for balance transfer, that bank charges you GST and a processing fee in return for this facility.

What is the benefit of credit card balance transfer?

The benefit of a balance transfer is that you can repay the loan of the first card with the amount of the second credit card. However, due to this, the loan of the second card (from which the money has been transferred) becomes outstanding on you. But the benefit of this is that you get a new grace period. If you repay the amount in that grace period, then you do not have to pay any interest. Also, you avoid becoming a defaulter and your credit score does not get spoiled.

What is the method of balance transfer?

There can be two ways to transfer the balance. The first way is that you have to call the customer care of the bank and get the balance transferred from them. The second way is that you transfer the balance yourself from the bank's app or website. For this, you will need the details of both the cards. Also, you can choose the method of repaying the balance transfer in a lump sum or EMI option.

Balance transfer can become a problem in this situation.

If you take a balance transfer once or twice, then there is no problem, but if you choose this option every day, then your CIBIL score gets affected. Apart from this, if you choose the option of balance transfer and are unable to repay it in the grace period, then the risk of getting trapped in the debt trap once again increases because the interest on the credit card bill is very heavy and it is charged according to compound interest.

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